Financial Results
Oilseeds segment stands out in
ADM quarterly financial results
CHICAGO - Profit rose for the Oilseeds
segment of Archer Daniels Midland Co.
in the first quarter ended March 31 behind higher soybean crush margins and
a 2017 biodiesel tax credit. ADM's results
rose overall thanks to the Oilseed segment's contribution.
Net earnings attributable to ADM
were $393 million, up 16% from $339 million in the previous year's first quarter.
Operating profit of $704 million was up
4.1% from $676 million, and revenues
increased 3.6% to $15,526 million from
$14,988 million.
Segment profit in Oilseeds increased
12% to $350 million from $313 million.
Global market dynamics continued to
push soybean crush margins higher.
ADM set crush volume records in North
America and South America.
A drought in Argentina contributed to
the increasing soy crush margins as did
several other factors, said Juan R. Luciano, chairman, chief executive officer and
president of Chicago-based ADM, in a
May 1 earnings call. One example was a
U.S. tariff effectively stopping the flow of
Argentine biodiesel into the United States.
"I think also the Brazilian origination industry has become more rational following
an exceptional challenge in 2017," he said.
Refining, Packaging, Biodiesel and
Other results, also within Oilseeds,
were substantially higher on about $120
realigned business units will allow for better synergies and utilization of resources
and better reflect how we are now running our businesses," Mr. Luciano said.
"For example, moving Wheat Milling into
our new Carbohydrate Solutions business
means our two starch processing operations now can work more closely together
to develop and sell products."
Moving Animal Nutrition into the Nutrition business unit means that ADM's
'Given our strategies and priorities, our
realigned business units will allow for better
synergies and utilization of resources and
better reflect how we are now running our
businesses.'
- Juan R. Luciano,
Archer Daniels Midland Co.
million of income due to the passage of
the 2017 biodiesel tax credit.
The quarter marked the first time ADM
reported financial results after realigning
its business segments into four units: Oilseeds, Origination, Carbohydrate Solutions and Nutrition.
"Given our strategies and priorities, our
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pet treat team will work more closely
with the flavor and color experts at Wild.
"Bioactives and Nutrition will also benefit from being in the same business, and
the continued move toward personalized
nutrition is closely related to increasing
health consciousness among food and
beverage consumers," Mr. Luciano said.
In the Origination segment, operating
profit in the first quarter slipped 4.3% to
$45 million from $47 million. Merchandising and Handling was up significantly
year-over-year. Global Trade had higher
margins and increased volumes, resulting
in a significant turnaround compared to
the year-ago period. In Origination, the
Global Trade business delivered its fourth
consecutive profitable quarter and its best
first quarter in four years, Mr. Luciano said.
North American grain was down compared to the previous year's first quarter on
lower U.S. export volumes and about $40
million of mark-to-market effects on existing contracts due to improvements in forward export margins and barge freight rates.
Transportation was down due to high river
levels, resulting in increased operating costs.
In a May 1 call with investment analysts,
Mr. Luciano said trade friction between
the United States and China was expected
to adversely affect ADM's business.
"ADM is one of the largest exporters of
U.S. sorghum to China, and we do expect a
negative impact of about $30 million in the
second quarter related to the Chinese deposits being imposed on that trade," he said.
The Carbohydrate Solutions segment reported profit of $213 million, up 0.9% from
$211 million in the previous year's first quarter. Starches and Sweeteners was up over the
prior year on increasing contributions from
the 2017 acquisition of Chamtor, a Frenchbased producer of wheat-based sweeteners
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